Donor-advised funds: making year-end giving strategic, easy, tax smart for clients.

• Author: Spiegelman, Rande
• Position: Charitablegiving

As year-end holidays and tax deadlines apporach charitable giving can be unplanned, difficult to organize and rushed. But with proper planning, iCs possible to help your clients realize charitable giving goals while reaping significant tax benefits.

A donor-advised fund DAF is quickly becoming a popular philanthropic solution for clients, and the growing use of DAFs isn't surprising. Accounts can start as low as $5,000 or as high as $1 billion and deliver outstanding tax benefits for a wide range of gifts from cash and appreciated securities to closely held shares and property

One of the most notable features of DAFs is how they meouple the timing f the charitable tax deduction from the granting, which enables donors to easily make one tax-deducible contribution at year-end and grant to charities of their choice on their own schedule, DAFs also allow donors to maintain a level of privacy around their giving if they desire.

An Easy, Low-cost Solution

Simply put, a DAF is a charitable account opened in the name of one or more individual donors and custodied by a non-porfit typically a charitable organization founded by a financial services company, a community foundation or a university. The donor decides when and how much to contribute to the account and can direct grants to 501 [c] (3) charities that are in good standing with the IRS. The custodian vets charities for IRS eligibility and sends out grants at the donor's request

The custodian also manages the investment of the charitable assets based on guidance from the donors. Some custodians offer a choice of investment pools and allow independent investment advisers to manage the assets of larger accounts. The custodian is responsible for the recordkeeping, which is usually consolidated online, allowing donors to casily access a list of all of their contributions and grants for tax purposes, thereby enabling a strategic approach to philanthropy.

DAFs are a much simpler alternative to private foundations, which often require more administrative duties. Private Foundations must create and manage a board of trustees. hire administrators. file increasingly accessible public documents. ensure annual disbursements meet the IRS requirement of. 5 percent of foundation assets and pay excise taxes on investment income.

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Upon opening a DAF autumn. incremental gifts start at S100 and there are no annual disbursement requirements or public filings. Grants start as low as S50 mid...